Final Expense Insurance: What is it?

Also known as burial insurance and funeral insurance, final expense insurance is a type of insurance that covers the last expenses you can be expected to make in your life. Literally, insurance to cover the final expenses of life; typically the cost of a funeral and burial or cremation.

Funerals and other end of life expenses are often riddled with hidden and unexpected expenses. Families coping with a sudden loss often confront these expenses in a stressed state of mind. Burial fees, which are often separate from mortuary expenses, become an unexpected and unwelcome burden. Final expense insurance helps cover these expenses.

When you purchase final expense insurance, your family will be protected against unanticipated expenses that would add stress to an already stressful time. Coroner fees, mortuary service costs and disposal fees are all covered under a standard indemnity policy. Protecting your family from these expenses after you are gone is the primary purpose of final expense insurance. In this case, it pays to plan ahead.

Why Purchase Final Expense Insurance?

Planning for the future is a necessity throughout life, and the end of life is no different. Taking responsibility for the financial burden left by the end of your life is incredibly important for the continued well-being of your family once you are gone. Final expense insurance helps relieve the financial burden caused by end of life fees, and is an important step to take.

It's important to remember that final expense insurance is not strictly insurance for you. This type of burial insurance policy, also considered a supplemental life insurance plan, is insurance for your family members. Those loved ones who would have to face the financial burden of your passing can be covered under this kind of insurance policy. Your family is already losing you; don't make them lose their financial stability as well.

If you don't already have a funeral insurance policy covering your family members, now is the best time to obtain one. You don't have to worry about your existing investments, assets or inheritance; all of these are guaranteed to remain untouched according to the indemnity clause in your final expense insurance policy.

Beyond the financial safety net, final expense insurance exists to provide emotional and mental security. Your family members will know that, when the worst happens, they will be free to grieve in their own time, without the looming pressure of burial expenses. A comprehensive funeral insurance policy will leave your family free of the worries associated with paying for a funeral. They won't be forced to go through the hazardous process of obtaining a loan to cover funeral costs, which can be a time-consuming and perilous procedure.

Final Expense Insurance: Typical Terms

The usual terms and conditions of a final expense insurance policy vary from instance to instance. The terms establish the limits of disbursement of your policy after you pass away. The precise terms will depend on the planned expenses and estimates you have for your current mortuary service. In other words, you will likely need to plan ahead and establish your funeral services before you purchase a final expense insurance policy.

If you are investigating final expense insurance, know that virtually every insurance provider will require that you be under the age of 85. This, along with various health factors, helps the insurance provider estimate risk and establish the term of your policy. This is so that you have enough time to pay into the policy to a level that allows it to pay out effectively. Be aware that certain lifestyle choices will affect your eligibility.

In some cases, you may be able to get the physical requirements for a burial insurance policy waived. In these cases, you must get the waiver in writing. Likewise, there may be instances where certain limitations are placed on death benefits; these change from insurer to insurer and must be obtained in writing to be honored.

If you are under the age of 85 and are in reasonably good health, you should have no trouble qualifying for final expense insurance independently or as part of general life insurance coverage. You will be able to work with your mortuary of choice in order to estimate the price of funeral services, burial and other expenses. A written copy of this estimate is the basis for your final expense insurance. Any guarantees on the part of the mortuary can be incorporated into the policy.

Obtaining a Final Expense Insurance Quote

How do you know that you have found the right final expense insurance policy for your needs? Rest assured, this is one of the most common questions in the industry.

The first step, as with any form of insurance, is to call a selection of insurance providers to obtain quotes. You will likely need an estimate of your funeral costs, as well as a general impression of your overall health, for an accurate quote. With each quote, review the terms of service. Make sure that the quoted policy is capable of meeting your financial needs. You may be looking for a simple burial insurance policy. On the other hand, the best policy for your situation may be one with full life insurance coverage, burial coverage, death and dismemberment coverage and hospital bill coverage.

Once you have a selection of policies that will cover your general needs, you can check the disbursement terms of each policy. Look for one that best fits your predicted requirements. Early termination limits and higher premiums are the usual penalties incurred if you need to change an ill-suited policy at the last minute.

Be aware that the quote you obtain will be based on the typical costs of burial in your area, usually on a state-wide basis. Within a state, such costs can vary widely. Once you have selected a quote to pursue, you can obtain more specific burial cost estimates to give to your insurer, who can then create a more accurate policy.

There are a number of factors that contribute to the cost of a burial. If you choose a casket burial, it will be more expensive than a cremation. Likewise, a more expensive casket in a more expensive plot of land will run up higher costs than a budget casket in a more affordable plot of land.

Covering Your Final Expenses

In our culture, death is often a taboo subject. Few people are willing to talk openly about the inevitability of their eventual death and the necessary expenses that come with the end of life. Unfortunately, when dealing with the tragic end of life, open and frank discussion is vital. Estate planning is important for the end of life.

Final expense insurance is engineered specifically to cover the cost your family would otherwise be forced to pay upon your death. In many cases, this makes final expense insurance just as important, if not more so, than planning advanced medical directives and wills. Planning the expenses of your end of life helps you keep your loved ones out of debt and in a financially stable position while they mourn your passing.

There is often some confusion about the difference between final expense insurance and life insurance, with many people thinking that final expense insurance is essentially life insurance for the elderly. The starting value of a typical life insurance policy is around $10,000; when used to cover final expenses, this has to cover the burial plot, funeral service, casket and any accessories. The actual cost of these items and services is typically much less than $10,000. As a result, a dedicated final expense insurance policy will cost much less. In fact, the usual final expense insurance policy is only a couple thousand dollars. Which would you rather do; slowly pay into an insurance policy and save your loved ones several thousand dollars, or leave them with the responsibility of that financial burden with no insurance to back them up?

Picking a Coverage Amount for Final Expense Insurance

The most common mistake people make when they enroll in a final expense insurance policy is not taking into account every expense that comes with a funeral and burial. Before you sign up with a plan, you must ask yourself a few questions. Where do you want to be buried? Do you want to be buried, or would you prefer to be cremated? What urn or casket do you want? Consulting a funeral director will help you make these choices, estimate costs and put together a final expense insurance policy that meets your needs.

At the most basic level, a burial insurance plan will leave you enough money to cover a simple funeral service with a basic casket, modest funeral service and other minor accessories. This does not cover the plot of land itself, the headstone or other major accessories. This plan is best for cremations and extremely simple, low-key funerals. Alternatively, you can go for a higher tier plan that includes headstone, hearse and viewing services, for a higher cost.

Don't forget about the other accessories that go with a funeral. Are you considering hiring a limousine for an extended circle of family or friends? Are you going to organize a procession from the funeral home to the cemetery? Do you want an organized display of flowers? All of these are additional expenses that need to be considered when estimating the costs of an end of life insurance policy.

As always, talk with your designated mortuary to determine what funeral packages they have available, what additional services you can add to the package and what the total cost would be for your desired selection. As long as you have an accurate estimate of your chosen funeral services, you will be able to obtain a final expense insurance policy that covers your needs. This keeps the expense in your hands and out of the hands of your loved ones.

Peace of Mind: Knowing you Picked the Right Plan

Life insurance and final expense insurance are similar in one major way; they can both be divided into two types. These types are whole life and term. Term insurance lasts for a set number of years. If you were to purchase a 15-year term final expense policy at the age of 80, and you live to the age of 96, those 15 years will be up and the policy will expire with no payout. On the other hand, if you purchase a while life policy, you will be guaranteed a payout no matter how long you life This becomes a valid concern when you realize you likely cannot purchase such insurance if you are older than a certain threshold, generally between 75 and 85. If you are healthy, there is a very real possibility that your term insurance will not pay out.

Thankfully, obtaining final expense insurance is easy. All you need is some basic medical information and paperwork. In virtually all cases, you are able to obtain at least a basic plan. If you have medical problems, it's possible that your plan selection will be limited to certain high-premium policies, or other plants that require a certain number of years of payments before they take effect.

Life insurance is a valid option for some, but for many, a final expense insurance plan is a better choice. Life insurance policies are more expensive and often deny people due to preexisting medical conditions. Life insurance pays out more, but the excess is of no benefit to some families.

In general, you will want to follow the same basic process as you would when shopping for any kind of insurance. Use our tools to obtain as many quotes from as many agencies as possible. Analyze those quotes for their terms and conditions that may restrict their payouts or your eligibility. Make sure to talk to a mortician and gain an accurate estimate of your funeral costs. Only then will you be able to decide which term and which plan fits your situation the best.